BASIC CONCEPTS OF INCOME TAX AND RESIDENTIAL STATUS .pptx

BASIC CONCEPTS OF INCOME TAX AND RESIDENTIAL STATUS

1. BASIC CONCEPTS OF INCOME TAX Dr.V.SHANTHA MEENA, ASSISTANT PROFESSOR OF COMMERCE, V.V.VANNIAPEUMAL COLLEGE FOR WOMEN, VIRUDHUNAGAR

2. Important Definitions: 1. Assessment Year :Section 2(9) “Assessment year” means the period starting from April 1 and ending on March 31 of the next year. Eg : Assessment year 2024-25 which commences on April 1, 2024 and ends on March 31, 2025. Income of previous year of an assessee is taxed during the assessment year at the rates prescribed by the relevant Finance Act for tax rates

3. 2. Previous year : section 3 Income earned in a particular year is taxable in the next year. The year in which income is earned is known as previous year and the next year in which income is taxable is known as assessment year. In other words, previous year is the financial year immediately proceeding the assessment year. For the Ass.yr 2024 -25, the Pr.yr is 2023-24

4. 3. Person : Section 2(31) The term “person” includes: an individual; a Hindu undivided family; a company; a firm; an association of persons or a body of individuals , whether incorporated or not; a local authority; and every artificial juridical person not falling with in any of the preceding categories.

5. 4. Assessee : Section 2(7) Every person in respect of whom, any proceeding under the act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable or of the loss sustained by him or by such other person or the amount of refund due to him or to such other person may be called an assessee.

6. Deemed Assessee : A person who is deemed to be an assessee for some other person is called “Deemed Assessee”. Assessee In Default : When a person is responsible for doing any work under the Income Tax Act and he fails to do it, he is called an “Assessee in default”

7. 6. Gross Total Income Sec : 80b (5) As per section 14, the income of a person is computed under the following five heads: 1. Salaries. 2. Income from house property. 3. Profits and gains of business or profession. 4. Capital gains. 5. Income from other sources.

8. 5. INCOME : Section2 (24) The definition of the term “income” in section 2(24) is inclusive and not exhaustive. Therefore, the term “income” not only includes those things that are included in section 2(24) but also includes those things that the term signifies according to its general and natural meaning. Income, in general, means a periodic monetary return which accrues or is expected to accrue regularly from definite sources. However, under the Income-tax Act, 1961, even certain income which do not arise regularly are treated as income for tax purposes e.g. Winnings from lotteries,

9. Total Income Sec : 2(45) Total income means the amount left after making the deductions under section 80C to 80U from the gross total income. Casual Income : Any receipt which is of a casual and non-recurring nature is called casual income. Casual income includes the following receipts: 1. Winning from lotteries, 2. Winning from crossword puzzles, 3. Winning from races (including horse races), 4. Winning from card games and other games of any sort 5. Winning from gambling or betting of any form or nature

10. Residential Status As per section 6, an individual may be resident and ordinarily resident in India, (b)resident but not ordinarily resident in India, or (c) non-resident in India. The following are the two sets of conditions for determining the residential status of an individual Basic conditions : He is in India in the previous year for a period of 182 days or more OR He is in India for a period of 60 days or more during the previous year and has been in India for a period of 365 days or more during 4 years immediately preceding the previous year.

11. Additional Conditions: ( i ) He has been resident in India in at least 2 out of 10 previous years immediately preceding the relevant previous year. AND (ii) He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year. Resident An individual is said to be resident in India if he satisfies any one of the basic conditions. (A)Resident And Ordinarily Resident An individual is said to be resident and ordinarily resident in India if he satisfies any one of the basic conditions and both of the additional conditions.

12. (B)Resident But Not Ordinarily Resident An individual is said to be resident but not ordinarily resident in India if he satisfies any one of the basic conditions but not satisfies both of the additional conditions. (c)Non-Resident An individual is a non-resident in India if he satisfies none of the basic conditions. Exceptions to the Basic conditions An Indian citizen who leaves India during the previous year for the purpose of taking employment outside India or an Indian citizen leaving India during the previous year as a member of the crew of an Indian ship. (b) An Indian citizen or a person of Indian origin who comes on visit to India during the previous year (a person is said to be of Indian origin if either he or any of his parents or any of his grandparents was born in undivided India).